Accounting Ch.12 Securities Classified "Trading" debt or FVTNI equity
What is the formula for comprehensive income?
CI = NI + OCI
Trading and FVTNI securities are initially recorded at?
Cost including any brokerage fees.
How to record the receipt of a dividend?
Debit to cash and credit to dividend.
On the statement of cash flows, Cash flows from buying and selling these securities are classified as what type of activity?
Either Investing or Operating based on nature and purpose for which the securities acquired.
When the balance sheet is prepared in subsequent periods the, how are trading debt security investments and FVTNI equity investments recorded?
Either up or down to its fair value.
When selling a trading debt security investment or a FVTNI Lacking influence less than 20% holding equity investment what are the steps?
First we must make an adjustment to the fair value adjustment account on the date of sale. Second we must record the sale.
What type of activity is dividends received on the statement of cash flows?
An operating cash inflow.
Where are the Trading debt securities and Fair Value through net income less than 20% holding lacking influence equity securities investments themselves reported at ? Which Financial Statement?
As assets on the balance sheet reported at their fair value
How are Trading debt securities and Fair Value through net income less than 20% holding lacking influence equity securities presented in the Income Statement? This question is asking where do the fair value changes show up?
Fair Value changes are included in the income statement in the periods in which they occur.
Are gains debited or credited? Just normal accounting practices
Gains are credited
When would cash flows from Trading debt securities and Fair Value through net income less than 20% holding lacking influence equity securities be classified as an investing activity.
If they are not held for sale in the near future, If for some reason we want to hold on to them and sell way down the line that cash flow would be turned into an investing cash flow.
Fair value through net income securities are investments in equity securities for which the investor?
Lacks significant influence
What does an Equity security investment mean if it is given the classification of "No Influence"
Less than 20% Holding.
How do you calculate the change needed for the fair value adjustment account?
Look at the beginning balance and determine what adjustment must be made to reach your desired result.
Are losses debited or credited? just normal accounting practices
Losses are debited
What is another name for fair value?
Market value.
The unrealized holding gains and losses for trading debt security investments and FVTNI equity security investments are reported as a part of?
Net income
Do trading debt securities and Fair Value through net income less than 20% holding lacking influence equity securities affect AOCI? Accumulated Other Comprehensive Income in SHE?
No
Trading Securities are investments in debt securities acquired principally for the purpose of?
Selling them in the near term to profit from short term price changes.
Which financial statement does the fair value adjustment show up on?
The Balance Sheet.
When calculating the fair value adjustment what two numbers will give us the balance we need in the fair value adjustment account?
The difference between the previous fair/market value and the current fair/market value.
What two accounts are used when adjusting the fair value of the investments?
The fair value adjustment account and the unrealized holding/gains-net income account
In which account are the adjustments to the fair value from the carrying value/Amortized Cost recorded when operating with Trading classified debt security investments and FVTNI No influence equity security?
The fair value adjustment account.
What amount is recorded in the fair value adjustment account
The gain debited or the loss credited in the fair value adjustment for the difference between the current value of the investment and the new fair value of the adjustment.
For Trading debt securities and Fair Value through net income less than 20% holding lacking influence equity securities where are their unrealized and realized gains and reported? Which financial statement? think about the special classification that we give to the unrealized holding gains and losses when we record the fair value adjustments.
The income statement
On which financial statement is the dividend income/revenue and interest income/ revenue
The statement of cash flows if its cash and the income statement regardless if its cash or not.
How are Trading debt securities and Fair Value through net income less than 20% holding lacking influence equity securities presented in the Statement of Comprehensive Income?
These investments do not affect other comprehensive income. therefore they are not reported on the statement of comprehensive income.
How are Trading debt securities and Fair Value through net income less than 20% holding lacking influence equity securities presented in the Balance Sheet?
They are reported at their fair value, typically as a current asset.
What is so different about the trading classified debt security investments and FVTNI equity security investments that isn't the same as Held to Maturity Debt security bonds.
They go from being reported at their carrying value to being reported at their fair value after the initial purpose and recording at Cost.
How are unrealized gains and losses recorded in the journal entries? What accounts do we use?
Unrealized Losses- Net Income for losses Unrealized Gains- Net Income for gains
In which accounts are unrealized holdings and gains reported for trading classified debt investment securities and FVTNI Equity classified securities.
Unrealized gain-net income or unrealized loss-net income
How do we account for the sale of investments that are classified as trading debt securities investments and FVTNI lacking influence less than 20% holding equity security investments?
We always debit the cash and then we take two things off the books: The investment itself off at Cost and the remaining balance in the fair value adjustment must be removed as well.
Why don't we initially credit the investment when adjusting Trading classified debt securities and FVTNI no influence equity securities?
We have the Fair Value Adjustment Account as a place holder
When recording the sale of investments do we take the investments off the books at their fair value or their cost?
We take them off at their cost.
When does a gain or loss become realized?
When it is reported on the income statement.
When is the Fair Value Adjustment Account Credited?
When the fair value of the investment decreases
When is the Fair Value Adjustment Account Debited?
When the fair value of the investment increases
When can we recognize a gain or loss on an asset?
When we actually finally sell the asset.
